Vedanta’s Orissa project nixed

After five long years of court hearings, violent public protests, Centre-state wrangling and media coverage, the government denied permission for bauxite mining at Niyamgiri in Orissa, settling the dispute in favour of the tribe that’s indigenous to the area.

Environment minister Jairam Ramesh’s announcement on Tuesday will mean that an integral part of the Orissa Mining Corp. Ltd-Sterlite Industries India Ltd project will have to be scrapped. Sterlite is a wholly owned subsidiary of Vedanta Resources Plc, a London-listed company, which also owns Vedanta Alumina Ltd, operator of the Lanjigarh alumina refinery, which was to have been fed by bauxite from Niyamgiri.

The Orissa government can move the high court or the yet-to-be-established green tribunal.

In 2005, a memorandum of understanding was signed between Orissa and Vedanta to set up the complex, including the alumina refinery and a captive power plant. It also included the supply of 150 million tonnes (mt) of bauxite for Vedanta’s alumina refinery at Lanjigarh, for which the state had identified the Niyamgiri mine as the initial source of the material’s supply to the extent of 78 mt.

“There have been serious violations of the Forest Rights Act (FRA), the Environment Protection Act (EPA) and the Forest Conservation Act (FCA),” Ramesh said. “We have also issued show-cause notices to the company. This is not an emotional decision. There is no prejudice and no politics. This is not because Niyamgiri is sacred (the hill with the bauxite deposits is held sacred by the primitive tribal group known as the Dongria Kondh). This is purely a legal approach.”

According to the firm’s statement released after the decision: “As at 31 March, Vedanta had invested $5.4 billion (`25,272 crore today) in its aluminium projects in Orissa. Around 10,000 people are employed at the Lanjigarh alumina refinery plant. Vedanta is currently operating its alumina refinery with outsourced bauxite.”

The company said the state government is trying to make sure that it can supply bauxite from alternative sources.

“In view of the ongoing delay in approval of the Niyamgiri mining, the government of Orissa is actively considering allocation of alternate source of bauxite to Vedanta’s alumina refinery, from the state of Orissa,” said the statement.

The state government could not be reached.

“In response to the certain allegations raised in the report, Vedanta Resources reconfirms that there has been no regulatory violation of any kind at the alumina refinery,” the statement added.

The company said in a revised statement that it sent out later, “We are not in possession of Niyamgiri mine and no mining activity has been or will be undertaken till all approvals are in place.”

On Tuesday evening, Sterlite lost 3.97% to end at `152.40 on the Bombay Stock Exchange. The key Sensex fell 0.53% to 18,311.59 points. Vedanta closed 7.07% down in London.

The environment ministry has relied on a recent report by former bureaucrat N.C. Saxena, the recommendations of the Forest Advisory Committee (FAC) and the attorney general’s opinion, according to Ramesh.

The Saxena report, in its investigation of the implementation of FRA, found that the legitimate claims of the Dongria Kondh have been discouraged and denied without the due process of law, which is illegal on part of the district or sub-divisional committees. The report further said that the Orissa government is not likely to implement FRA in a fair and impartial manner since it has gone to the extent of forwarding false certificates.

Under FRA, rights (individual and community) of tribals and forest dwellers have to be recognized and settled, and consent must be taken from the concerned community before any project can go ahead in the area.

Ramesh, however, clarified that the environment ministry was not taking congnizance of this. “The Saxena committee made a number of observations on state officials. I don’t agree with that and believe that they were acting to the best of their ability. There will not be any witch-hunt,” he said.

The committee report also found serious violations by the company’s alumina refinery in its illegal expansion from 1 million tonne per annum (mtpa) capacity to 6 mtpa. The report said that “this amounts to a serious violation of the provisions of EPA” and “is an expression of the contempt with which the company treats the laws of the land”.

The environment ministry has issued two show-cause notices to the company. One asks it to explain why environment clearance for the 1 mtpa alumina refinery should not be revoked. The second asks why the terms of reference (ToR), which are equivalent to approval for a project, for the environment impact assessment report for the expansion should not be withdrawn. Ramesh added that ToR and the appraisal process for the expansion stand suspended.

“This seems like a full stop for this proposal. But the refinery issue still remains,” said Ritwick Dutta, an environment lawyer. “The pollution problem from their operations still needs to be resolved. We’ve stopped something that was about to happen, but haven’t undone the illegalities already done.”

The panel’s conclusions and recommendations, which were accepted by FAC and forwarded for the final decision, also mention instances of violations under FCA. Mint reported this on 24 August.

The ministry’s note on the factors that have dictated its decision said that the Saxena panel went into great detail highlighting various instances of violations under FCA.

“All these violations, coupled with the resultant impact on the ecology and biodiversity of the surrounding area, further condemn the actions of the project proponent. Not only are these violations of a repeating nature, but they are instances of wilful concealment of information by the project proponent,” it said.

The environment ministry is in the process of examining what penal action should be initiated against the project proponents for the violations. Moreover, the Jharkhand mines from where the refiner is sourcing the bauxite do not appear to have the necessary clearances, the ministry said.

Regarding the other high-profile project awaiting the environment ministry’s approval—the Posco integrated steel plant in Orissa—Ramesh said he has asked the Meena Gupta panel to submit its report by September-end, after which he will consider the case.